Outlook Bleak for Spanish Market Comeback

Market stabilization isn’t expected any time soon, with an 8% drop in sales projected for 2011.

Jorge Palacios | Jan 20, 2011

MADRID – Spain’s new-car market will decline about 8% in 2011, and a return to healthy levels isn’t expected for several years, industry insiders say.

Although Spain finished 2010 with a 3.1% gain in new-car sales to 985,199, the increase masks the huge decline suffered in the year’s second half.

After posting a 25.7% year-to-date increase through June, the market went into a freefall as incentives from the government’s 2000E Plan scrappage program expired and a 2-point hike in the value-added tax went into effect. Demand plunged by 23.8% in August, and similar or worse declines were posted in subsequent months.

Stabilization isn’t expected any time soon, as the auto importers’ association, ANIACAM, is forecasting a drop to 900,000-unit sales in 2011 and predicts continued job losses at dealerships until the market can return to volumes of 1.2 million

“The problem is that we forecast that volume will not come back until 2015 – and until that year, the official distribution networks will need a 10% cut,” ANIACAM President German Lopez says.

He predicts sales declines of about 30% per month in the year’s first half due to the unfavorable comparison with like-2010’s incentive-fueled market. Early data from the first two weeks in January suggests the market is off 26.6% from year-ago, according to the IEA, a Spanish auto industry researcher.

The second half of 2011 should see sharp gains of about 25% monthly, Lopez says, as comparisons become more favorable and economic activity picks up steam.